More changes to Canada’s Competition Act now in force; more to follow…

Significant changes to the Competition Act are now in force. 

These amendments came into force immediately upon receiving royal assent on December 15 as part of Bill C-56, with the exception of the amendments to the civil competitor collaboration provisions that will come into force on December 15, 2024. The amendments enacted were proposed in Bill C-56 on September 21, 2023. See our earlier update for a more detailed discussion of the amendments. However, Bill C-56 was revised in committee, and amendments to the abuse of dominance framework that were not originally part of Bill C-56 were added by the House of Commons Standing Committee on Finance.

Key features of the amendments include:

Compulsory powers for market studies 

As a result of the amendments, both the Minister of Innovation, Science and Industry and the Commissioner of Competition can initiate a market or industry study where they determine it is in the public interest.¹ The Competition Bureau (the Bureau) can obtain a court order on an ex parte basis under Section 11 of the Competition Act (Act) to compel businesses or individuals to provide information for the purposes of a market study conducted by the Bureau. 

Repealing the efficiencies defence

Section 96 of the Act, otherwise known as the efficiencies defence, has been repealed. The efficiencies defence provided a defence for mergers that would have, or were likely to have, the effect of preventing or lessening competition where the merger has brought about or was likely to bring about gains in efficiency that would be greater than, and would offset, any anticompetitive effects. 

The transitional provision in Bill C-56 states that section 96 of the Act will continue to apply to proposed transactions notified under the Act before the amendments came into force as well as substantially completed mergers. 

Civil orders against collaborations that lessen or prevent competition, even among non-competitors 

The amendments will allow the Competition Tribunal (the Tribunal) to make an order under section 90.1 of the Act prohibiting parties from or requiring them to take any action if the Tribunal finds a significant purpose of any agreement or arrangement, or any part of it, is to prevent or lessen competition in any market. The Tribunal could make an order even if none of the parties to the agreement or arrangement are competitors.  

This provision does not come into force until December 15, 2024, to provide businesses time to review their agreements and collaborations to ensure compliance with the amended provisions. 

Changes to abuse of dominance framework

The current framework requires both anticompetitive intent and effects to be shown. As a result of the amendments, it is only required to show that either (i) an anticompetitive act intended to have a predatory, exclusionary or disciplinary negative effect on a competitor, or to have an adverse effect on competition, or (ii) that conduct not resulting from superior competitive performance has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market. 

However, the amendments specify that where the Tribunal finds only one of anticompetitive intent or effects, the Tribunal may make an order prohibiting conduct but not requiring payment of an administrative monetary penalty. Only when both anticompetitive intents and effects are established can the Tribunal order an administrative monetary penalty. 

Administrative monetary penalties have been increased by the amendments to $25 million ($35 million on a subsequent order). Now, any administrative money penalty cannot exceed the greater of $25 million and three times the value of the benefit derived from the anticompetitive practice, or, if that amount cannot be reasonably determined, 3% of the business’ annual worldwide gross revenues.

The amendments also include “excessive and unfair selling prices” as an example of an anticompetitive act. However, “excessive” and “unfair” are not defined in the Act, and it is uncertain how they will be interpreted by the Tribunal and courts. This uncertainty is further compounded by the fact that private parties can bring abuse of dominance applications, and they may seek to apply more aggressive interpretations. Including this new anticompetitive act, combined with right of private enforcement, creates the prospect of strategic proceedings being brought. 

These amendments to the abuse of dominance framework were not originally part of Bill C-56, but were added by the House of Commons Standing Committee on Finance, as discussed in its Thirteenth Report.² 

Key takeaways

Businesses need to carefully review their arrangements and collaborations within the next year before the amendment to section 90.1 of the Act comes into force. In considering the impact of these amendments, businesses should also be mindful that additional sweeping amendments to the Act are currently before the House of Commons in Bill C-59 and will likely be enacted in their current form. For more information, please see our earlier legal update. 

Taken together with the proposed amendments in Bill C-59, these changes to the Act constitute the biggest changes to it in over a decade. Businesses need to stay apprised of developments and further amendments to the Act so they can proactively manage the potential compliance risks. Companies with a strong market position should consider how these changes and the proposed amendments in Bill C-59 could affect their potential risk exposure.

It is expected the Bureau will provide additional guidance on its approach to enforcing provisions of the Act both for the enacted amendments and any proposed amendments that become law. However, the timelines for, or quality of any such guidance is unknown.

We will continue to monitor the developments in this area and provide further analysis on any further amendments to the Act.